Shale gas flavour of the moment

Shale gas fever has spread to Australia. The question on everyone’s mind is whether the industry that has boomed in North America and now accounts for almost 30 per cent of United States natural gas production can replicate its success in Australia.

There is a big prize to go for, with the country’s shale gas resources put by the US Department of Energy at a massive 396 trillion cubic feet, or almost 10 times the volume behind Chevron’s $US37 billion Gorgon LNG project in Western Australia.

The early signs have been positive. The results from flow testing at
Beach Energy
’s first shale gas well in the Cooper Basin have surpassed expectations, while hopes are high for a similarly positive outcome from testing next month at
AWE
’s Arrowsmith-2 well in the Perth Basin.

The recent emergence of Hess Corporation, ConocoPhillips and BG Group in small Australian ventures has shown that the local potential has not escaped the notice of experienced North American players.

Last week, Lloyds Bank’s global head of oil and gas, Andrew Moorfield, forecast that Australia, thanks to its economic stability and proximity to Asia, would become the No. 2 shale gas market after the US and he let it be known that the bank was willing to finance investments in the sector.

But it won’t happen overnight. As Jon Stewart, executive chairman of fast-growing Texas-focused
Aurora Oil & Gas
points out, the shale gas industry in North America might have only surged to prominence in the past few years, but it has been around for two to three decades.

The depth of the oil services sector in North America, with its multitude of shale gas drilling rigs and hydraulic fracturing crews, is absent in Australia, while gas infrastructure in several shale regions here, such as the north-west of WA and the Northern Territory, is non-existent.

Years of experience in the US have revealed varying performances of the different shale plays in terms of production rates and liquids content, as well as from different areas within a single play.

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